FirstCry Shut 38 Stores In Q3, To Invest INR 300 Cr In Subsidiary

Kids-focussed omnichannel retailer FirstCry will infuse about INR 300 Cr in its wholly owned subsidiary, Digital Age Retail Private Limited (DARP), which is engaged in retail trade of baby, kids and maternity products. 

The investment will be made through subscription to equity shares of DARP in one or more tranches in the ongoing financial year, as part of the company’s strategic expansion plans, FirstCry’s parent Brainbees said in an exchange filing. 

“Approved the proposal to invest an amount of INR 2,99,59,91,448.02, by way of subscription to equity shares of Digital Age Retail Private Limited (DARP), wholly owned subsidiary of the Company, in one or more tranches,” the company said in an exchange filing. 

The funding will comprise INR 254.6 Cr from the proceeds of its initial public offering (IPO) and about INR 45 Cr from internal accruals.

The company said that the funds will be used to set up new modern stores and towards lease payments for existing identified modern stores and towards repayment of existing loans of INR 45 Cr of Brainbees.

Notably, as of December 2024, the company had about 1,136 modern stores (including company operated and franchise stores), out of which 508 stores are company-operated stores. 

Also, for the first time, the company shuttered 38 company operated stores in Q3 FY25. 

“This is the first time we have undertaken such a cleanup, as we had never closed even a single store before,” said Supam Maheshwari, cofounder and CEO of FirstCry. 

The company checked the foot traffic and wallet share within a given catchment area for the stores. “After analysing the data, we found that these 38 stores did not meet the desired performance levels. This decision was not specific to any one city or location but rather a strategic move to optimise our store network, ensuring better efficiency in terms of location, size, and overall performance,” Maheshwari said. 

Responding to a question, Maheshwari denied that the rising popularity of quick commerce was behind the store shutdowns. He said that the footfall could have been affected by various factors, including ongoing construction projects, which in some cases last two to three years, particularly in metro areas. 

Further, he explained that while the company uses online data to identify optimal pin codes for opening new stores, the physical layout of a pin code in India can be quite broad, covering diverse areas within a city or town. 

“In some cases, finding the right catchment area within that pin code becomes a challenge, as does securing an optimally sized store,” he quipped. 

Slowdown In International Business?

Overall, FirstCry’s consolidated net loss narrowed 69.5% to INR 14.78 Cr in Q3 FY25 from INR 48.41 Cr in the same quarter last year, driven by strong top line growth.

Revenue from operations surged 14.3% to INR 2,172.30 Cr from INR 1,900.19 Cr in Q3 FY24, while consolidated adjusted EBITDA rose 30% year-on-year to INR 293 Cr during the quarter.

However, the company’s international business seems to be facing headwinds. During the first nine months of FY25, the total orders of its international business registered only a small growth to 1.5 Mn from 1.4 Mn in the year-ago period.

In a statement, FirstCry said that Q3 saw an increase in promotional activities “by two horizontal ecommerce players who are new entrants in the region (UAE and KSA) ”.

However, Firstcry consciously stayed away from following this trend and continues to focus on achieving sustainable growth by improving margins.

“This is the same story we have seen play out in India, where we have had multiple horizontal players entering the market, including two recent entrants. However, these are not just focussed on the baby and kids’ segment. It is challenging for a horizontal player to succeed in the mother, baby, and kids category, as it requires building multiple moats to sustain a vertical play,” Maheshwari explained. 

Acknowledging the increase in the competitive intensity, the CEO said that the company will continue to refine its strategy. 

“We cannot make decisions based solely on one or two quarters of performance. This is exactly how we navigated the market in India, and we are confident in replicating that success across the region over a longer horizon,” he added. 

Ahead of the Q3 results on Saturday (February 8), shares of FirstCry ended Friday’s trading session 9.87% lower at INR 417.9 on the BSE.